What factors determine the level of risk in a project?

The level of risk in a project is primarily determined by two key factors: likelihood and impact. Likelihood refers to the probability that a particular risk will occur, while impact measures the potential consequences or severity of that risk if it does materialize. Together, these factors help in assessing the overall risk level by providing a quantitative and qualitative perspective on what could go wrong and the extent of the effect it could have on project objectives.

Understanding likelihood allows project managers to forecast the chances of various risks arising, while analyzing impact helps prioritize risks based on how detrimental they could be to the project's success. This combination is essential for effective risk management, enabling teams to focus their resources and efforts on the most critical risks that could threaten the project.

Other options, while relevant to risk management, do not specifically define the core factors that establish the level of risk. For instance, priority and risk rating deal with assessing the urgency of addressing certain risks rather than quantifying the risks themselves. Probability and practicality introduce a focus on outcomes and real-world applicability but do not encapsulate the core risk assessment terminology. Risk identification and mitigation are vital processes in handling risks but do not directly correlate to determining their level.